Explain the categories of The activity cost drivers

The activity cost drivers can broadly be classified into following three categories:

1) Transaction drivers: for example the purchase orders processed customer orders processed inspection performed and the set-ups undertaken all count the number of times an activity is performed.

2) Duration drivers: mean the amount of time required to perform an activity example of duration drivers arc set-up hours and inspection hours.

3) Intensity drivers: refer to drivers which directly charge for the resources used each time as activity Is performed. Duration drivers establish an average hourly rate of performing activity resources relevant to a product.